Pay off mortgage and start having fun!

getmore4less

newgirly wrote: »

I had a post this morning from get more for less which I did not answer, it was a question about making a plan to put forwards to the mortgage company on Wednesday.

Id already looked at the figures and had a couple of options in mind, on extending two years and one extending four. It would free up £380 and £620 respectivly , however I'm guessing that even if they did allow us to alter the term, they would insist on extending the term much longer due to affordability?

Top of my head I would be looking much further than 2 and 4.

current 7 years, easy I would look out to retirement(say 60) manageable somewhere in the middle.

It is the payment that determines how long it takes not the contractual term, give yourself more flexibility which needs longer term.

getmore4less

Picking up on something you said earlier.

On the business not sure why you think you can't get rid of people if you need to.

You can't retire people anymore but can make them redundant.

unless there are contractual benefits the max cost is 30weeks pay capped at £475pw (+notice if you want them out)

You can move people around so the jobs that go don't have to be the people doing them.

edit : found the reference
we need to downsize a couple of staff ,but are unable to , two were made redundant about four years ago. But with the new changes in law and many much older staff

What makes you think you can't get rid of people?

What changes in law are you talking about?

newgirly

We use a company that specialises in health and safety , employment law etc. When dh took over he went in blind as he had previously worked on then shop floor too. It was the safest option as it was essential we got it right when making redundancies as the previous boss had been sued for a lot of money by a member of staff who was sacked incorrectly, I don't know but that is what we have been told. After doing. A bit of research it seems we can make full time retirement age staff go part time, but the one member of staff this applies to will probably go soon anyway,plus is more likely to stay long term if he is part time.

The people we want to retire and not the ones whom would be up for redundancy following the normal criteria.my understanding ismthenlaw changed recently to allow retirement age star to continue in their jobs for as long as they wish.

As for moving people , its not feasable as most jobs (not mine!) Have taken years to perfect their skills, and it would take years again to train them to do a different stage of the process.

Not sure about the term, my guess is it will be a no from the mortgage company anyway, and if its a yes it will be on whatever terms they decide which is likely to be longer I would have thought. I would have thought adding four years and freeing up £680 pm was enough though? I suppose it doesn't matter really anyway as either way it can be overpaid.

ahem_47

newgirly wrote: »

Not sure about the term, my guess is it will be a no from the mortgage company anyway, and if its a yes it will be on whatever terms they decide which is likely to be longer I would have thought. I would have thought adding four years and freeing up £680 pm was enough though? I suppose it doesn't matter really anyway as either way it can be overpaid.

NG - you need to think about the reason for this meeting and as Get More has stated go informed about what you want and why. You have indicated asking for an extension of either 2 or 4 years (the latter freeing up what you believe to be £680pm) whereas Get More is suggesting an even longer term - for example can we say a 10yr extension.

I am a little confused by everything that is going on.

First the current repayment of your IO mortgage at 82 months (is the total o/s £138k?) seems to be a self imposed timescale. Am I reading this right? If it is self imposed why should re-negotiating the term be so difficult and why should it be on their terms? I feel I am missing something here :doh:
Second what is the £8k you owe (previously mentioned) and what are the terms?
Third, the £80k that is owed for the unit - how is that financed? What are the default positions?

Finally - how are they all linked/ intertwined? They are not consolidated are they?

These need breaking down for the best advice. Then, dare I say it, consider what the "mortgage company" - unusual term, reputable? - are prepared to offer before committing (as I am sure you would).

I am conscious that this is all rather public although I have picked up the figures from what you have revealed. And of course getting a 10yr extension would not mean you would not have to get seriously MSE anyway!!

Like everyone else I am rooting for you and like others have admired the way you have handled the scrutiny. Tough love is what is needed though

gallygirl

newgirly wrote: »

GG its seven years IO and I HOPE it will be cleared in the term - by overpayments :eek:

Crikey, that's a big ask :eek:. OK, let's assume the worst, that you make only smallish OP's and in seven years owe say 100k. Let's assume also in seven years your children have left home. Let's also assume business hasn't picked up and you can't get a mortgage. With the equity in house currently, plus 40k OP's what could you and OH get for your money? Somewhere big enough to live in?

newgirly

Late for work , will reply later , thanks!

getmore4less

only extending the current 7 year deadline by 2 or 4 is just compounding the previous mistake of shortening it.

Extend as long as you can and pay that on a repayment schedule, then look at overpaying once you have a proper budget in place that you can keep to.

If you only extend a couple of years an interest rate rise will just mess you up again.

Your current budget needs filling out and everything planed properly or a much larger Emergency fund(with £pm savings) in place.

using £138k at 4% (roundish numbers to nearest £100)
7y £1900
19y £1500
11y £1300
13y £1100
15y £1000
17y £900
I think 17 years puts you around 60.

I would probably try for the longest term budget a payment around £1kpm, £500pm into the emergency/unplanned/longer term savings and then balance the rest of the budget, run that for at least year then review how much surplus you are really generating.


The new rules do men that lenders need to look at cases(to avoid repos) doing it now makes much more sense than in 5-7 years when it is too late.

getmore4less

It is possible to retire people BUT that needs clear business reasons.

If you need fewer people then there are steps you can go through to achieve that.

If you just want rid of people and will be replacing then that needs to be done much more carefully. Understand the reasons and manage around them.

You can use bumping, so for example if you decided you(as part owner) need to be in one of the roles that has much of the control you can take over that job and the persons that do that get displaced, possibly redundant.

I would have a review of all the employment contracts to see what can be done to manage the business.

eg. do you have lay off clauses for slow periods, what about overtime terms are they enhanced rates, holidays statutory or more...

Capacity management can be a real issue when big contracts are taken on.

Well established companies can be difficult to restructure and become more efficient, with skilled workforce a long term strategy is needed.

I seriously doubt the skill acquisition times are as bad as you think.

Also be very surprised if you can force people on to part time if they are at retirement age, what makes you think that?

getmore4less

edinburgher wrote: »

and getmore4less with a bit less tact)
.

I have not read the full 5 year thread but this should have been picked up much sooner by other posters.

I only drop in every now and then and some things just catch my eye.

When the numbers don't stack they need to be hit head on.

velocity_girl

Hi newgirly - I have been reading your thread with interest for a little while and thought I'd come out of the woodwork and say hi :wave:

I have to agree with getmoreforless that it sounds like you may need to consider redundancies as your current business situation doesn't sound sustainable. I have a bit of experience of employment law and, without trying to be too blunt about it, a lot of these dedicated HR/H&S companies are absolutely useless and not much better than doing it yourself. I would suggest having a read of ACAS's guide to small scale redundancies here as it sets it out very clearly http://www.acas.org.uk/index.aspx?articleid=4547

You are perfectly entitled to dismiss people as redundant if there is not sufficient work for them to do or there is not enough income to pay them (as long as you follow correct and fair procedures, which the ACAS guide will help you with). If, however, you have specific people you want rid of because they're not performing, that is not a redundancy situation and I would suggest having a read of ACAS guides to performance management - you can dismiss people for capability reasons if they don't improve satisfactorily within a reasonable period (it will take a bit longer, but is hopefully less likely to lead to litigation than a sham redundancy).

(NB - usual caveat that you should take professional advice etc!)